Hitting the sweet spot: meeting client needs in a changing market

Ahead of the reinsurance industry’s annual gathering in Baden-Baden, Hiscox Re & ILS’s Marlon Williams discusses the evolving market dynamics and how the firm approaches client engagement in preparation for upcoming renewals.

For many reinsurance carriers, the 1 January 2023 renewals marked an inflection point for rates. While this has been a positive development for reinsurers, in the five years preceding the current cycle, a confluence of factors depressed reinsurance pricing, threatening the long-term health of the sector.

Reflecting on market dynamics, Hiscox Re & ILS senior international underwriter Marlon Williams said: “Following a prolonged period of imbalance, rates have been restored due to several factors. Sustaining the current rating environment is crucial for the long-term health and outlook of the reinsurance sector.

“As we approach the upcoming renewal cycle, we are focused on being long-term partners for our clients, and that means we need to maintain discipline on rates, terms and conditions.”

The market is facing a complex mix of macroeconomic and geopolitical challenges, including inflation, climate change and increasingly frequent and severe natural catastrophe events that challenge how we currently model and predict risk.

“These factors are reshaping the global risk landscape,” Williams noted. “From Canada’s recent series of severe weather events to riots in New Caledonia and widespread flooding across Europe, we are experiencing increasing risk on a global scale. Our team is constantly evaluating this evolving risk profile with our cedants and end consumers in mind.”

At Hiscox Re & ILS, a disciplined approach to technical underwriting and modelling has been a key factor in navigating these market conditions.

“Our proprietary ‘Hiscox View of Risk’, which integrates our own research with industry-standard risk models, informed the early action we took on adjusting attachment points. Accounting for inflation, we took a nuanced, country to country approach, negotiating our treaty structures to be supportive of our clients. This proactive planning has positioned us well in navigating the enhanced risk environment,” Williams explained.

Global dynamics impacting reinsurance rates

The contribution of climate change to increased frequency and severity of natural catastrophe events continues to be a significant topic of discussion. “This year alone, we’ve witnessed natural disasters such as Hurricane Helene’s impact on the southeast US, fires in Chile, flooding in the UAE, Canadian floods and wildfire, and European flooding,” Williams noted.

“Each region presents its own set of risks, and we take a bespoke approach for each of them.”

Hiscox Re & ILS brings together cross-functional expertise to deliver solutions to the evolving risk landscape, from in-house catastrophe modelling and actuarial support teams to research and development, and a leading legal and claims team. “There is a strong culture of collaboration with underwriters working side by side with catastrophe modellers, actuaries and our wider team of experts. Our approach to pooling knowledge has helped us stay ahead of global cat trends. We’ve been in this business for over 100 years, and collaboration, insight and agility is key to our next 100.”

Hiscox’s approach to client engagement ahead of renewals

In preparation for renewals, Hiscox Re & ILS is focused on finding the balance between the needs of its clients and the capital it services. “Our focus at Hiscox continues to be on fostering sustainable, long-term relationships with our brokers and our clients. We understand that each client and portfolio is unique, and we take a robust, technical approach to assessing exposures within our clients’ portfolios.”

Williams also highlighted the importance of open and honest dialogue before and during renewals. “We’re having meaningful conversations with brokers and cedants about what's achievable and where Hiscox capital can be consistently deployed.

“Our role as a market lead is to find ways to help our clients manage their risks effectively and also provide insight, given the unique position we find ourselves in as a reinsurer that manages a portfolio truly global in nature. The sharing of evolving trends and best practices is critical as we look at ways to reduce losses and strengthen the overall resilience of our portfolios.”

Williams emphasised that transparency and open communication are key to building long-lasting relationships with clients and brokers. “Renewals are about more than just pricing – they’re about having an honest dialogue about what’s achievable, ensuring sustainability and working together to unlock solutions.”

“At Hiscox Re & ILS we operate as one team, unlocking capital and embracing risk to deliver the best outcomes for our clients.”